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THE stock market slump will last at least until the end of the year, experts reckon.

And it's set to be the longest since the 1940s, the last time the market fell for three years in a row. But it's still not time to give up on shares despite the unending gloom.

The FTSE-100 is currently about 46 per cent down on the 6930.2 it hit in January 2000. It lost 10 per cent in 2000 and 19 per cent in 2001 and so far is around 25 per cent down this year.

That's worse than the 1940s slump when the market lost eight per cent in 1947, seven per cent in 1948 and 15 per cent in 1949. And it's not going to recover in the next three months, according to financial experts.

Economist Andrew Clare of Legal & General says: "The bear mentality is going to be with us until the end of the year at least. Investors seem to be looking for bad news rather than focusing on good news." M&G's John Hatherley says: "Investors are basically demoralised." And Standard Life's Jacqueline Kerr says: "The market might fall further, but it is reasonable value now."

Fidelity's John Ross adds: "Most people have been really surprised by the extent of the decline in stocks."

The current slide is blamed on weak international economies - deflation in Japan and recession in Germany.

The US economy isn't growing as fast as had been expected, while US companies are still not seeing increased profits. Worries persist the US could be heading for another downturn, the so-called "double dip".

Also hanging over the markets is the fear of war with Iraq. Fidelity's John Ross says: "When you have the uncertainty that war could be on the way, that's not good for the market. Once it's finally decided what will happen, the market could be more stable."

The 1990/91 Gulf War proved that. When Iraq invaded Kuwait, markets around the world slumped, but once Iraq was defeated, the markets recovered all their losses within four months.

The sliding markets and fear of war don't stop everyone from investing, as Paul Sanderson shows. The 35-year-old from London lives with his partner Beth Ward, 35, and their son Ben, 13 months.

He started investing #200 a month in an M&G index tracker via direct debit in February this year just as the market was falling.

Paul says: "We have just had a baby and the saving is primarily for him. I'm not planning on cashing it in for a long time. I hope the market continues to fall as fast as it can so I can get more units.

"We are getting more for our money at the moment and will do better in the long run. The tracker is not doing very well though. If I cashed it in now I wouldn't get back what I'd put in. But I want an investment which offers a good return. You wouldn't put cash in a building society because of low interest rates."

Stock market historians maintain the market always bounces back. Since 1970 there have been 17 occasions on which markets have fallen by 10 per cent or more.

Yet average annual returns since 1970 are 11.4 per cent, according to Standard & Poor's.

And experts still maintain now is a good time to buy, although you have to be brave. Andrew Clare of L&G says: "It is probably a very good time to buy equities. If you are a long-term investor, you need to be able to sit this out."

Standard Life's Jacqueline Kerr adds: "It would be foolhardy for investors to cash in now.

"We remain quietly optimistic about shares generally."

Both firms expect the US economy to pick up towards the end of the year and boost the markets.

Shares to avoid remain the telecom and technology sector plus emerging markets such as Russia or Korea.

But major "blue chip" companies and particularly banks and insurance firms are a good bet.